Christopher Chope: I beg to move, That the Bill be now read a Second time.
	This is a short Bill but an important one because it raises an issue that affects everyone in the country: the level of regulatory charges imposed on them. I think it was the Minister for the Cabinet Office and Paymaster General who coined the phrase “stealth taxes”. He did so more than 10 years ago, but it is still a highly relevant term, because when public sector organisations increase their fees and charges, they are essentially imposing additional taxes on the populace.
	While I was looking into possible subjects on which to introduce Bills during this Session, I had some very unsatisfactory correspondence with the Care Quality Commission about the price it was charging for the registration of a children’s hospice in Dorset called Julius House. At that stage, Julius House had three residents rooms but it wanted to add a further room, and the CQC said it would have to pay a substantial additional fee of thousands of pounds. The hospice chairman wrote to me saying he thought that was unsatisfactory as the hospice is, after all, a charity and all its costs are covered by charitable donations, which in this instance were, effectively, going into the proxy coffers of the Government by way of a regulatory burden.
	Following that, the CQC conducted a consultation on its level of charges in general. I will refer later to some of the conclusions to be drawn from that, but it is clear that the CQC is intent on increasing the burden of charges well above the rate of inflation from year to year, partly to meet the Treasury requirement that it should cover its costs by raising charges. We know, however, that it is possible for organisations to reduce their costs, although that option is very often not taken by regulatory authorities. Fortunately, the BBC is now being forced to reduce its costs because the Government have said the licence fee cannot be increased.

Christopher Chope: The short answer is that I do not intend that definition to cover local authorities. On the lack of explanatory notes, my right hon. Friend is a lawyer of considerable repute and he is capable of reading a two-clause Bill just as well as anybody else. This is a not a complicated 100-page, six or 10 schedule Bill. We know that you, Mr Speaker, are saying that we must ensure we get good value for money, and we want to reduce our costs, so I thought it would be an unnecessary burden and an additional cost to have explanatory notes for something that is self-explanatory. I hope, in
	due course, to take my right hon. Friend through the terms of this short Bill, so that if he has any doubts, he can ask questions in interventions and so on. Perhaps I shall do so now, as I am being prompted.
	Clause 1 refers to:
	“No regulatory authority carrying out functions in England”,
	so the Bill extends only to England. Although we have to say that it applies to England and Wales, it will apply only to England.

Christopher Chope: My Bill deals with the cost of regulation rather than the wider issues of regulation that have been raised in, for example, Lord Young’s report. I have a number of other Bills before the House that cover various aspects of Lord Young’s recommendations.
	My concern is that it is too easy for the regulatory authorities to say that they have to increase their charges because they have to carry out more activities. That is what they do. My hon. Friend will know this better than anybody, because he probably has the coalition’s programme for government on his bedside table, but that document talks about reducing the burden of regulation:
	“We will cut red tape by introducing a ‘one-in, one-out’ rule whereby no new regulation is brought in without other regulation being cut by a greater amount”
	and:
	“We will end the culture of ‘tick-box’ regulation, and instead target inspections on high-risk organisations through co-regulation and improving professional standards.”
	I am unsure how what the Care Quality Commission has done to dentists fits in with the second paragraph on business of “The Coalition: our programme for government”. Perhaps all will be revealed when my hon. Friend the Minister responds to the debate.

David Nuttall: I am grateful for the opportunity to speak briefly in support of a most laudable Bill. I congratulate my hon. Friend the Member for Christchurch (Mr Chope) on bringing the measure before the House this morning. The Regulatory Authorities (Level of Charges) Bill might be referred to more colloquially as the control of stealth taxes Bill, and when it reaches the statute book, as I hope it will, perhaps that is what it will be called.
	Most people would see the Bill as right for the times in which we live—often described as an age of austerity. I am grateful to my hon. Friend for raising some of the problems that regulatory authorities cause. Whenever I have conversations with a professional, be it an accountant, a solicitor or an architect, it is not long before we reach the subject of the imposition of fees from regulatory authorities. From my time in practice, I know that a common source of concern was that bodies such as the Law Society or the Solicitors Regulation Authority seemed able to charge what they liked, without any real control over how they arrived at their fees.
	For an organisation that is not in the competitive world, it is all too easy to increase the charges they make on those they have under their control, instead of cutting costs. In many cases, people have no choice about where they have to apply for the licence or certificate they need to conduct their business. That is why some measure of control over regulatory bodies is appropriate.
	Many people see those bodies as above the law; they seem to operate in a parallel universe, immune from the pressures of the real world where there is a need to control costs and ensure that the prices charged to customers and clients are kept as low as possible. Those pressures do not exist when there is a captive market and people have nowhere else to go.
	The problem with regulatory authorities is that in many ways they are a law unto themselves. Their activities rarely attract much attention. People may have to return to professional bodies every year, but in the case of many other bodies it is only every few years. My hon. Friend mentioned passports. Over 10 years, the cost of a passport increased from £17.50 to £77.50, which far exceeded the rate of inflation over that period, but nobody sat down with a calculator to work out whether the fee went up in line with inflation, or massively more than that. Businesses have to cope not only with the regulatory burden imposed by such bodies, but with the financial burden.
	I fully accept that the Bill is not the ideal solution. I would prefer the abolition of the regulatory burden in the first place, and although I accept that in many cases regulation is essential, I am pleased that the coalition Government have been making excellent progress in culling the numerous public bodies and quangos. No doubt the Minister will refer to that later. However, despite the Government’s activities in culling quangos, hundreds will still exist, so the Bill is relevant and essential to protect both the public and businesses from excessive fee increases.
	We might think that the onset of new technology, and the possibility for individuals and companies to file things online—in some cases, they have no alternative—would have the effect of driving down prices. Of course, we know from the licence fee freeze that has been
	imposed on the BBC that, when an organisation is told to cut costs rather than increase its licence fee, it can be done. A few years ago, when Companies House was given freedom from the Government, its filing fees actually decreased. I remember how pleased companies were that the filing fee for an annual return, for example, stopped increasing and started decreasing, so it can be done.

David Nuttall: My hon. Friend makes a good point, and I agree with the general thrust of his comments: service users should contribute to the cost of the service that they use. It is right that, for example, solicitors and accountants pay for the costs of their regulatory bodies. People have no difficulty with that, but the problem comes when regulatory bodies, which are answerable to no one other than their own membership, feel that they can impose excessive increases way beyond the inflation rate, rather than considering ways to control their costs. That is particularly important when organisations across the public sector are being asked to live within their means, and that is the Bill’s thrust.
	I certainly hope that the Bill receives the overwhelming support of the House this morning. I wish it well on its progress through the House and in another place. I look forward to hearing the Minister’s comments and to seeing the Bill on the statute book in the months to come. I am sure that it will be widely welcomed, not just in the House, but across the country.

Chi Onwurah: I commend the hon. Member for Christchurch (Mr Chope) not only for his customary skill in securing such an optimal slot for his private Member’s Bill, but for his interest in this very important area. Not enough Members are sufficiently excited by regulation, but when growth is flat-lining and businesses continue to struggle with the effects of a challenging economy, it is important that we discuss the role of regulators and particularly their impact on businesses.
	As somebody who formerly worked for the telecoms regulator, Ofcom, which the hon. Gentleman was good enough to praise, I am familiar with the effect that regulation has on businesses of all sizes. I understand his deep frustration with the Government’s broken promises on regulation. Regulation protects consumers and employees’ rights; it ensures that our industries play their part in moving towards a green, sustainable future; and it keeps citizens safe. It has no doubt saved many lives. It is therefore important that it is effective and enforceable, but challenges arise when ill-thought-through regulation has unforeseen consequences or is interpreted bureaucratically and inflexibly.

Stephen McPartland: Police forces have recently suggested that inflexible health and safety regulations have prevented them from doing their jobs and from going to help
	people in dangerous situations. Does the hon. Lady agree with them?

Chi Onwurah: I thank the hon. Gentleman for that intervention. We can all agree that the work of the police needs to be supported by effective regulation and by ensuring our police have the rights needed to pursue their necessary duties in the best way possible.
	Regulation can certainly represent an unacceptable burden on businesses, particularly small and medium enterprises, which may not have the legal advice to interpret regulation accurately or the resources to implement it fully. Like many hon. Members, I am a passionate advocate of effective measures to free businesses from red tape, but I do not believe that the answer is to impose arbitrary restrictions on authorities that could hinder their enforcement capabilities. I am afraid that I am not entirely convinced by the Bill. It would introduce restrictions on a wide range of different regulators, and it would therefore need considerable examination in detail in Committee.
	When in power, Labour sought to reduce regulation, by introducing the Better Regulation Commission and the ongoing better regulation programme, and made a number of legislative changes to reduce the costs of regulation. I am sure that the hon. Gentleman would not be promoting the Bill if the Government had managed to keep their headline-grabbing promises on reducing regulation. As the director general of the Institute of Directors is quoted as saying in yesterday’s Financial Times, the Government’s rhetoric on red tape and planning has yet to be matched by action.

Chi Onwurah: I am expressing considerable doubts about the Bill, but I have not said whether or not we will support it—it is too early to say.
	It is regrettable that charges have risen in regulatory authorities, not only for passports but in a number of other areas that hon. Members have mentioned. It is the duty of those to whom the regulators are accountable to ensure that those charges provide value for money for our citizens. I am not convinced that an arbitrary imposition of centralised regulation can effect the right kind of change in regulators’ behaviour.
	Answers to parliamentary questions asked by my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) revealed that, by February this year, this Government had introduced 424 new regulations while removing just 172. That is hardly one in, one out. It was reported at the time that the Secretary of State for Business, Innovation and Skills read the riot act to Cabinet colleagues about their lack of progress, while neglecting to mention that his own Department, which is responsible for regulation, had in 10 months of government removed precisely no significant regulations, while introducing 53 new ones. So I understand why the hon. Member for Christchurch expresses frustration.
	The Opposition believe that it is essential to take a fresh look at existing regulation, how it is implemented and particularly how it is translated from European directives. However, I am concerned that this arbitrary blanket ban is, like too much of the Government’s current legislative programme, lacking in detail in many key areas. For example, some regulators’ charges are a percentage of their stakeholders’ turnover. Will the Bill limit the absolute amount or the percentage?
	Regulators may at times be able to reduce charges. Would not the Bill create a perverse disincentive to reducing charges, given that regulators would know they have to come to Parliament to increase them? For example, in 2006 Ofcom raised the application fees for radio licences while reducing the ongoing fees in order to meet the important criterion of reflecting cost. Under the Bill it would not have been able to do that.
	At the heart of the Bill there appears to be a principle of centralisation. Regulators operate in a wide range of industries and areas. Is it appropriate that one regulation should apply to all? In response to the question, “Who regulates the regulators?” the hon. Member for Christchurch answered, “This Bill,” but in most cases, regulators are answerable to Select Committees and Departments of Government, which are answerable to the people. Does not the Bill imply that these Select Committees and Departments are failing in their duty? Do not the many criticisms expressed by hon. Members who have spoken imply that the issue should be addressed directly, rather than obscured by a blanket ban?
	We understand the hon. Gentleman’s deep frustration with the Government’s false promises on regulatory reform and we strongly support reductions in and improvements to regulation, but we fear that the Bill could have could have significant negative consequences for regulators and for industry. We need smart regulation, not blanket bans.

John Hayes: It is that part of the Bill that I am addressing, Mr Speaker, in very specific terms, and, yes, it could be argued that it makes the system more accountable, in the sense that it brings the matters before the House, but the spirit that lies behind the Bill and the powerful advocacy of my hon. Friend the Member for Christchurch, not just now but for all time of the need to place fewer burdens on business, is that rather than extending and elaborating the process by which we implement, consider and, indeed, devise regulation, we should simplify it.
	That brings me to the final provision of the Bill, which focuses on the duties of responsible Ministers and sets out plans to prevent them from increasing funding for their regulatory bodies. That would mean not only that the charging framework within which regulations operate were restricted, but that regulators should not have any additional funding from central Government as a result. I can understand why my hon. Friend argues that, and why the Bill seeks to put that argument into practice, but a better measure of the quantity and nature of regulation is required to consider these matters as fully as they might be.
	Let me find common cause with my hon. Friend. It is absolutely right that the House, and indeed the Government, should consider the impact of regulation. The CBI has argued that regulation is one of the key elements inhibiting growth. Its April 2011 survey described a Nigeria-style regulatory regime—its words, not mine, I hasten to add. It said that only that country had a similar regulatory burden to that of Great Britain. Apparently, according to the CBI, we rank 89th out of 139 countries for having the biggest regulatory burden. Its concern was that that regulatory burden had a powerful influence on growth, and unless we deregulated, as my hon. Friend’s Bill would, we would inhibit growth. This is not the first time that the CBI has argued this case, nor is it the only organisation that does so.
	My hon. Friend and others will be familiar with the Institute of Directors’ regulation reckoner, which it produces regularly, and I have here the 2011 issue. The IOD estimates that the total administrative costs of regulation for business for 2011 are growing and have a considerable impact on business both large and small. It argues that directors spend 17 hours a month on regulation administration and that the annual cost of regulation administration is £7,664 for each director. It says that work forces spend 106 hours a month on regulation. To put that in crystal clear terms, the IOD argues that the burden on work forces is equivalent to one member of staff working continuously on regulation from 1 January until 26 August, which is 34 weeks, to complete a business’s annual regulation administration. That is the kind of evidence that stimulates my hon. Friend’s concerns and motivates him in his mission to address these matters and to encourage the Government to do so too. This is why it is important that we debate these matters, and it is absolutely why the Government also take them seriously. The CBI argues that in order to avoid a double-dip recession the Government must deal with regulation. My hon. Friend suggests that his Bill, which is essentially about the nature and cost of regulation, would help us to do that.
	The arguments of others suggest that regulation does not only emanate from this place. It is the view of the Bruges group, with which my hon. Friend is familiar, that the cost of regulation to businesses that we in this country enjoy—or perhaps I should say endure—is about £100 billion, with EU regulation accounting for about half of the total. I know that you will be as shocked as I am, Madam Deputy Speaker, to hear that, and as determined as I am that we adopt such regulation only where absolutely necessary, and that we certainly do not gold-plate it. Yet the IOD tells us that that is precisely what the previous Government did. That is the risk we face.
	Not only must this House be diligent in ensuring that the additional regulatory burden I have described is not piled on to businesses large and small, but we must be even more mindful of the need to ensure that that which comes from other lands does not make the circumstances even worse. To that end, the Bill includes a definition of a regulatory agency in order to try to deal precisely with the matters I have described. However, I am advised by officials that the task of defining a regulatory agency, as the Bill does, is always a very complex one.
	It might be helpful to build on that advice and start by reflecting on the range of agencies and organisations already involved in our system of regulation, because for the proposed agency to have effect it would need to sit comfortably with the existing framework of regulators and be consistent with the forms in which that regulation is constituted. The large number of organisations and individuals that play a part in securing compliance form a complex landscape. Businesses have the primary responsibility for meeting their obligations under the law, but a number of agencies in the public and private sectors, as well as civil society organisations, also play a role.
	My hon. Friend the Member for Christchurch will know that national regulators secure adherence to the rules in many areas of modern life, including nuclear safety, pensions and health. He spoke earlier about some of the others, and I criticised him for using examples that would perhaps not be covered by the scope of the Bill, but none the less he made a powerful point about the range of areas of life and the range of activities and business on which regulation has an impact, and I understand his point.
	Local authorities also have a role in enforcing the law in areas such as food safety, under-age sales and consumer protection. Were the Bill to proceed, the regulatory agency my hon. Friend seeks to establish would need an appropriate legal interface with those authorities.

John Hayes: I am disappointed in my right hon. Friend, as a fellow owner of a Jensen Interceptor mark 3 and member of the owners club, because what I have said are merely my preliminary remarks on why the Government cannot accept the Bill in its current form. I will move on
	to why we feel that aspects of the argument put forward by my hon. Friend the Member for Christchurch are worthy and compatible with the Government’s determination to reform these matters in a way that reduced the burden of regulation. My right hon. Friend the Member for East Yorkshire (Mr. Knight) should not be so hasty in assuming that I do not share the reforming zeal that motivates him and others to make life more straightforward for our businesses so that they can add to the prosperity we all seek.
	On the specifics of the Bill, my hon. Friend the Member for Christchurch advocates a regulatory agency. However, unless that agency were to interface with the existing mechanisms for dealing with regulation, it would be impossible for the Government to accept its establishment as framed in the Bill, because there are many agencies that play an important role in the regulatory system, in both national and local government, and also agencies that play a role beyond the framework of the law. Trade associations, in particular, provide a service to businesses in the form of regulatory advice and guidance. Lord Young’s review of health and safety law, which has been referred to, highlighted the extent to which other agencies, such as the media and private consultancies, can create their own regulatory burdens. We are therefore dealing with diverse responsibilities.
	In some areas regulation is effectively free to business, which is why, as the Bill deals with costs, it is important that we assess which types of regulation impose costs and which do not. The costs of the regulator and regulation are often met by the Government. My hon. Friend, in his speech and in the Bill, makes no detailed assessment of the balance between the costs absorbed by Government and the costs imposed on businesses. The Government’s view is that in many cases it is in the interests of fairness that the costs of regulation are met by those who are regulated. Where such fees are charged, they can take a variety of forms, from licences to levies and charges for specific services.
	In those terms, the Bill, as I have said, starts from the commendable idea that businesses should be given as much certainty and transparency as possible on how they are charged by regulators and that appropriate controls should be in place to govern the way in which they are imposed. In that respect, I find common cause with both my hon. Friend the Member for Christchurch and my right hon. Friend the Member for East Yorkshire, who call for a zealous approach to assessing those costs and measuring how Government activity might add to them. It is right that the system, with regard to the imposition of costs, how they are gauged and how they grow, is properly assessed.
	Before I address the Bill’s specific points, I think that the House would expect me to put in context the scale and ambition of the Government’s approach to regulatory reform. Just yesterday I was looking at those matters with the Prime Minister and the Deputy Prime Minister in relation to apprenticeships. As you know, Madam Deputy Speaker, it is the Government’s intention to build more apprenticeships than Britain has ever had before, and we were looking at how some of the costs of putting in place the necessary regulation on apprenticeships could be lightened. For example, for large companies that are providing apprenticeships, we have announced that those costs—

John Hayes: We are back—are we not?—to the point that was made earlier in this brief debate, about quantity and quality, because it is true that the Bill will oblige the reconsideration of quality and effectiveness because of the link to charge. In other words, regulation will have to be legitimised around price, but it would be dangerous to assume that the effect of introducing that new provision—unless seen in the context of what is already there; the point made is existing charges and costs—might be as profound as my hon. Friend describes.

John Hayes: That—ipso facto—is certainly the case, but the qualitative judgment about regulation that I have advocated would need to be applied, too. My hon. Friend says that the Bill needs to be set in the context of what the Government have already agreed. The Government have agreed, as he knows, that they will regulate only
	“having demonstrated that satisfactory outcomes by alternative self-regulatory or non-regulatory approaches; and where analysis of the costs and benefits demonstrates that the regulatory approach is superior by a clear margin to alternative self-regulatory or non-regulatory approaches; and where the regulation and the enforcement framework can be implemented in a fashion which is demonstrably proportionate; accountable; consistent; transparent and targeted.”
	If one applied those principles to my hon. Friends argument, one would find, I assert, that his Bill is not necessary. Furthermore, I assert that his Bill, rather than applying those broad principles—I say “broad”, but they are clear in intent—would put in place a series of mechanisms that, as I argued earlier, might lengthen and make more complex the process.
	The Bill sets up a mechanism by which Parliament must scrutinise those matters, and my strong assertion and, indeed, recommendation to my hon. Friend is that the adoption of the regime I have just described, already articulated by the Government, is a more effective means of achieving his ambition than the Bill, which might have perverse consequences, albeit unintended, in making the system rather more costly and difficult than it need be.

John Hayes: I am going to come on to dentists and the rationale for dentistry regulation, because there has been some debate about it already this morning in consideration of this Bill, but before I do so perhaps I may be very specific, as you have invited me to be, Madam Deputy Speaker, about fees, charges and levies, which lie at the heart of the Bill.
	The fundamental policy of government is to charge for public-provided goods and services, where that approach helps to allocate the use of goods and services in a rational way, because it prevents waste through excessive or badly targeted approach. The Government argue that that makes for easier comparisons with the private sector, promotes competition and helps to develop markets. When a fee is charged for access to public goods or services, there are specific rules on how the charge should be determined, and it is important to protect Parliament’s rights to decide which services should be charged for and how public resources are allocated.
	That is much what my hon. Friend wants to achieve, but my argument is that there are mechanisms already in place to do what we wants. I accept that it is necessary for those mechanisms—how can I put it?—to be enlivened and accelerated by a commitment by Government to be absolutely scrupulous about where regulation applies, what is charged for and how those charges, those fees, should be gauged. I am giving my hon. Friend an assurance—not gold-plated but copper-bottomed, one
	might say—that the Government will indeed be determined, as he asks us to be, that the extent and character of that regulation, and the fees and charges associated with it, should be legitimised, should be moderate and should not increase in an unjustifiable way.
	A word about the specifics. My hon. Friend asks me to be less rhetorical. Most people enjoy—I will not put it more extravagantly than that—the rhetoric with which I embellish what I do, but I am prepared to take the slings and arrows as well as the praise, so I will for a moment or so move from rhetoric to detail.
	The rationale for dentistry regulations, which my hon. Friend draws attention to as an illustration of the purpose of this Bill, is clear. The Care Quality Commission is the responsible regulator, and the registration of dentists is a new requirement, as he says, reflecting the commission’s new regulatory responsibilities. The purpose of registration is to bring a single, consistent approach to monitoring dental practice, including private dental care practice, for the first time. This is regarded as an essential basis for encouraging swift action to protect the public, and it will give the public an accessible single source of information on quality. Fees are variable, according to practice, size and type.
	That is a perfect example, if I may say so, of two points that I have made: first, the regulation that is put in place should be coherent, clear and as simple as possible; and secondly, the fees and charging regime associated with that regulation should be established against a set of criteria that can be justified and supported by the profession concerned.
	I do not want to delay the House unduly, so I shall move swiftly on to the matter of the principles that underpin charging regimes. As we know, Madam Deputy Speaker—your advice has guided me accordingly—this Bill is principally about charges and pricing. The principles that apply to pricing and charging by regulators are those that apply to publicly provided goods and services in general, and they have at their core the central doctrine of setting charges to allow full cost recovery. We need to remember that in many cases regulators give consumers and others confidence that regulated sectors are meeting their legal responsibility. Regulators can also create the conditions that provide businesses with a level competitive playing field by taking effective action against criminals operating in their respective markets. We need to remember that in many cases it is appropriate for those whose activities need to be regulated to bear the cost of regulation, not the taxpayer.

John Hayes: My hon. Friend is right that small organisations in the voluntary and charitable sector are also affected by the burden of regulation. I will, as a result of his overtures, look at that matter too. I know that the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who has responsibility for regulation, takes these matters very seriously. He has been a great champion of small organisations in this respect. However, it is important that the Government
	are informed by the House. It is clear that Members from both sides of the House understand that if we are to build the big society that we seek, small organisations, charities and community organisations will play a critical part. It is right that we should look specifically at how regulation affects those organisations, and we will do so as a result of the arguments of my hon. Friend the Member for Christchurch and other Members.
	I will move on to explain why we feel that legislation is unnecessary in this case. This Bill, although it makes an immensely important point about the effects of regulation in practice, is not one that the Government can support. That is not just because there are existing controls that address the issues that the Bill seeks to address. It is also because regulators have a responsibility to ensure that they provide value for money and that the costs are as low as possible, while the quality of regulation remains appropriate. There needs to be flexibility in practice. Although we agree absolutely that we need to ensure that the burdens on business as a whole are taken into account when we introduce or review regulations—I add to that the other organisations that we have just spoken about—the flexibility that I have described needs to reflect a wide range of regulatory circumstances. That would be inhibited, at least to some degree, by my hon. Friend’s Bill.
	There are circumstances in which a modest uniform charge is appropriate. Many licensing regimes, where individuals must apply for a licence to trade, have that character. I spoke earlier about my view that the adoption of professional standards through licences to practise can be helpful in reducing regulation. It can provide a simpler series of mechanisms to guarantee quality, protect public health and ensure public safety.

John Hayes: We have spoken of dentists already. Perhaps I may take this opportunity to pay tribute to my own dentist, Lisa Jamieson of the Fen House dental practice in Spalding, who looks after my teeth and those of my wife and children. I will discuss this matter with her, because I believe that it is important as legislators that we are in touch with those whom legislation affects. Nevertheless, the case that I made on dentists is that the adoption of the new regulatory regime will simplify how we ensure that dentists are doing what they should. There are circumstances in which a new approach, framed by the desire to reduce regulation, can assist us not only in the matter of regulation, but in its cost.
	There are circumstances in which a substantial charge is appropriate. Some regulatory regimes require the inspection of hazardous, highly technical processes, and would otherwise present a substantial cost to the public. There are also circumstances in which a tiered approach is appropriate, for instance to reflect the costs to the regulator of regulating different sizes of business.
	The proposal that my hon. Friend articulated with such style and charm would limit regulators’ flexibility to innovate and incentivise in ways that work to the benefit of good, compliant businesses. The existing system, by contrast, supports that flexibility. Regulators might seek to reduce fees to some regulated organisations —we have spoken of small businesses, small charities, community organisations and so on—to reflect the intrinsically lower costs of the services provided to them. Yet they might simultaneously increase charges to organisations when the service in question is palpably more costly. That would surely be the case in respect of larger businesses, in the case of which checking compliance requires significantly more time and resources.
	My hon. Friend’s ambition is to allow small organisations, be they businesses, community organisations or charitable organisations, to thrive by the lighter hand of Government that both he and I wish to see applied. He will note that I take that ambition so seriously that I have said the Government will examine it once again with a critical eye. It is entirely possible to achieve it within the flexible regime that exists in respect of fees and charges, and it might, ironically, be inhibited by the proposals in his Bill.
	Meanwhile, the Health and Safety Executive has recently announced a proposal that would put charges on businesses that were found to be in material breach of health and safety laws. It would not seek to recover costs for purely technical breaches, of course, and compliant businesses would not pay a penny. That is another example of the flexibility that I am advertising as a virtue of the existing regime.
	It is fair to say that a range of approaches are appropriate, including ones that create strong incentives for better practice in businesses. In practice, the relevant legislative framework allows for all those approaches, and it is not appropriate to impose a single framework on all regulators. It is for them to determine the relevant approach, within the powers confirmed by Parliament and the public spending rules overseen by the Public Accounts Committee and the Comptroller and Auditor General. The existing arrangements provide meaningful parliamentary oversight, combined with a pragmatic foundation for regulators and Government to adjust their approach according to dynamic circumstances. If we were to adopt an entirely different approach founded on the consumer prices index, as my hon. Friend suggests, rather than on a cost recovery basis, the incentives would be very different.
	Finally, increases in fees limited to the CPI are unlikely to reflect the change in a given regulator’s costs. My hon. Friend argues that the cost to regulators is not the issue, and that the charge to organisations, whether they be businesses, individuals or otherwise, is always of paramount importance. However, it is equally important that there is some relationship between provision and fee, between cost and charge. It would be a very blunt instrument to apply the mechanism at the heart of the Bill in the way that he suggests.
	If the increase in the full cost of a service exceeds CPI, capping fees would either leave the taxpayer to pick up the bill or leave the regulator to do the job within its official resources. It would not necessarily save taxpayers money, and it could arguably let businesses and individuals off the hook, because they would not have to pay the price necessary to cover the regulator’s
	costs. That might be my hon. Friend’s intention, but I have never heard him suggest before that the taxpayer’s burden should be increased in such a blunt way. Indeed, I know for a fact that he has long been an advocate of cutting taxes where we can.

Christopher Chope: I would like to reply briefly to this debate. I am grateful to the Minister for setting out, in just over an hour, all the reasons why his Department does not think that this Bill is the right solution, although at least he acknowledges that there is a problem. In the absence of any other possible solutions, however, I am not sure that one can say this Bill is not worthwhile. Although the Minister talks a lot about sympathy and says he wants to reduce the quantity and increase the quality of regulation, it is apparent from the figures that he gave, as well as the quotes from the CBI and the Institute of Directors, that things are probably getting worse rather than better. The shadow Minister made that point in relation to the number of regulations being introduced and removed from the statute book. I sympathise with my hon. Friend the Minister: he is not the Minister responsible for deregulation; that is not his main brief and he is here today as the departmental Friday duty Minister. However, I was disappointed that he did not respond to what the hon. Lady had to say.
	In essence, this is whether we are going to try to control the stealth taxes reflected in the increased charges that regulators impose on consumers, individuals, businesses and charities. Nothing I have heard from the Minister gives me any encouragement in that regard. He was unable to explain—to my satisfaction anyway—why the Care Quality Commission is now trying to regulate dentists. He was unable, or did not wish, to engage in an argument about how we were going to pay for OFFA, the access regulator, and whether it was justified or whether it was going to be a new financial burden on the universities. He was unable to answer my question about the Forestry Commission in effective now seeking, because of a cut in Government grants, to fund its regulatory activities by imposing new charges that will force people to pay for their car parking in the New forest and elsewhere.
	Treasury guidance states that regulators must increase their charges to reflect their costs, but there is no guidance saying that those costs must not increase by
	more than the rate of inflation. That is the key to it. If the regulators were not allowed to increase their charges beyond the rate of inflation, they would have to keep their costs to within the rate of inflation. They would have to reduce their costs and become more efficient. I cited Ofcom as an example of a regulator that has reduced its costs by 20% in the past year. The BBC, too, is now having to concentrate its mind on reducing its costs significantly because of the pressure put on it.

Clive Efford: I accept that point, and I shall speak briefly about accuracy of information in a moment.
	Before the debate I checked the internet, as I was concerned about some of the fee-charging organisations that purport to provide information about criminal record checks. There seemed to be no way to check the background of such organisations to find out whether they were sound and operated reliable processes. A job applicant might find that an employer uses such services and that the information is inaccurate. That is a matter of concern, yet as the hon. Gentleman has pointed out, the Bill would not deal with it.
	There have been cases when information from magistrates courts has been called into question. Between 1980 and 2006, there was a substantial incident in Leeds when more than 2,000 cases were not recorded accurately at a magistrates court and a number of people avoided sentences and fines. It was thus not possible to check their records at a later date. One of the reasons given for that failure was the amount of bureaucracy and the burden it placed on magistrates courts, so we should want to consider the implications of the Bill for magistrates courts before we might support it.
	We have no objection in principle to the hon. Gentleman’s desire to share information that is already in the public domain. The force of the logic in his argument is on record, but at this stage he has failed to convince us that the Bill would solve the problems and that it would not have unintended consequences. We will be interested to hear the Government’s response to his contribution.

Stephen Phillips: As someone who sits routinely in the Crown court as a recorder, I can assure my hon. Friend that there are often mistakes in the antecedence sheets that are forthcoming from magistrates courts, that that causes an enormous problem for those who sit in the Crown court, and that that is perhaps one of the flaws of the Bill. Given that potential inaccuracy and the potential for blackening people’s names, does he not therefore think that the Bill needs looking at again before receiving its Second Reading?

David Nuttall: I hear what my hon. and learned Friend says, but I am not convinced that he gives a reason for looking again at the Bill. It might be a good reason to look again at how magistrates courts record and deal with information that they give out. The problem seems to lies with magistrates courts, not with the Bill. We ought to ensure that magistrates courts accurately record their convictions. It is not rocket science. Good grief, all that they have to do is write down what sentence has been given against someone’s name. It is difficult to understand how so many mistakes can occur.
	I accept what my hon. and learned Friend says from his personal experience: mistakes have occurred, which is highly regrettable, but the problem does not lie in the Bill. In fact, the Bill is a major step forward in providing openness and transparency in the field of justice. Justice must not only be done; it must be seen to be done. My hon. Friend the Member for Christchurch (Mr Chope) referred in his opening remarks to a case where someone was not in court when the judgment was read out. I dare say that often nowadays, especially since the reduction in the number of local newspaper court reporters, a judgment is read out but no one else is in court. Whoever gets to hear about it?
	I am pleased to be named as a sponsor of the Bill, along with my right hon. Friend the Member for East Yorkshire (Mr Knight) and my hon. Friends the Members for Wellingborough (Mr Bone), for Shipley (Philip Davies), for Kettering (Mr Hollobone) and for Witham (Priti Patel), because it has many benefits that will enable members of the public easily to ascertain whether another person has been convicted of a criminal offence. There are many reasons why someone might wish to do so.
	Of course, in some professions, CRB checks are required by law. In many cases, enhanced CRB checks are required. A lot of employers, particularly small ones, might want to check whether prospective employees who say that they have no criminal convictions are telling the truth. The Bill is a simple, straightforward way to enable that to take place. It is necessary to check the criminal background not just of those who work with children, teachers, social workers and those who deal with vulnerable adults, but of those who deal with money in the financial—

David Nuttall: I will come to the contents of the register later, but briefly, with modern technology it would be easy for records that are spent under the Rehabilitation of Offenders Act to be so marked on the register. That could be done quite easily. I do not see why that could not take place.
	Material that is secret would not suddenly be put in the public domain. The Bill would make available information that is already in the public domain. I see no argument why it should not be more widely available in an easily accessible format. I can see many benefits to a register on which members of the public could see not just the age and nature of the offence and the sentence that was handed down, but whether, for example, an offender had been ordered to wear an electronic tag. If a fine had been imposed, the public would be keen to see whether it had been paid, or whether only some of it had been paid. If an order had been made for someone to serve a certain number of hours of community work—a community sentence order—had they worked those hours? Had the whole of the sentence been completed? Had a criminal who had been sentenced to a term of imprisonment served the entire length of the term or, more likely, been released early? The public would want to see how much of the sentence the criminal had served. That would enable them to determine for themselves whether sentences were lenient or not.

David Nuttall: I agree with the Minister. I made the point at the outset that in due course I would like to see the legislation go further. It would be widely welcomed by the public if further information could be made available in the future. It would add to the transparency agenda, which I know the Government are keen on pursuing.
	One side effect of such a Bill, which is not intended to be a crime reduction measure, is that if people knew that their neighbours could easily turn on their computer and check whether someone had been convicted of a criminal offence, that may have the effect of reducing crime in this country.

David Nuttall: My right hon. Friend raises an interesting point, which fits neatly with my point about available technology and the sort of database that could be created. It is quite likely that a private sector organisation could put such information into a searchable database on the internet, which, as my right hon. Friend rightly says, could easily be accessed on a mobile phone. That is the way in which the internet is going. It is more and more likely that people will carry their own personal computers around with them—tablets are already available —and if a search can be made on a desktop computer in an office, it can be made as one walks down the street. I see no reason why that should not be the case. I cannot see the problems with that.
	The main point is that the information must be accurate. We already have the technology to make that happen, of that there can be no doubt. We have already seen the excellent Home Office website that enables individual householders to search right down to street level to find the number and category of crimes committed in their area. Having seen how complicated that website is, covering every road and street in the entire country, I think that the proposed database would be much easier to construct. Provided that measures were in place to ensure that the information on the register was accurate, which could be done easily by ensuring that people could check their own record free of charge, I see no reason why—

Stephen Phillips: Having heard the debate on Second Reading, I intend to make only some brief remarks.
	I congratulate my hon. Friend the Member for Christchurch (Mr Chope) and the Bill’s supporters. The Bill seeks to deal with an anomaly: that there is no mechanism by which a member of the public can secure access to information on the previous convictions of individuals appearing in the magistrates court, which, as other hon. Members have said, is in the public domain. I will not lend the Bill my support on Second Reading for a number of reasons, which I shall briefly identify.
	The first reason, already adverted to by the Minister in her intervention on my hon. Friend, is that the Bill, as drafted, is inconsistent with legislation on the rehabilitation of offenders and with the way in which this House and the other place have dealt with the rehabilitation of offenders. I am sure all Members agree that the rehabilitation of offenders is greatly to be desired so that the criminal justice system does not again have to deal with those who, particularly in their youth, have felt its tentacles reach out to them.
	Young men, and no doubt some young women, can make mistakes early in life and find themselves in the magistrates courts, quite properly, for criminal offences they have committed. For those who subsequently amend their ways, as the vast majority do, and participate fully in society, it would be a great shame if their early misdemeanours were to follow them for ever. We have legislation on the rehabilitation of offenders to ensure that early offences do not follow them around. One of the great problems with the Bill, notwithstanding the mischief that I accept exists, with which it seeks to deal, is that is does not grapple with that dichotomy.

Stephen Phillips: The hon. Gentleman might be right, but his difficulty is that the Bill does not propound the technological solution that, he advises the House, might be applied. He is therefore saying that the Bill, which he supports, is defective and should not receive a Second Reading.
	The Bill’s second problem, to which I have already adverted, is the scope for inaccuracy in antecedent conviction records from magistrates courts. My hon. Friend the Member for Christchurch was kind enough to say that this is a matter on which I know something, and I flatter myself that that is indeed the case. The simple position is that not all magistrates court records are of the quality that one would wish, either because they lack information or because they refer to the wrong individual.
	The keeping of magistrates court records is an undoubted problem. The Minister might need to look at properly funding courts to ensure that records are accurate, but until the problem is properly grappled with the Bill will continue to suffer from the defect that records that were inaccurate in part or in whole could follow individuals around for their entire life. Nothing would be worse than a member of the public, unbeknown to them, having associated with them a criminal conviction for an offence they had not committed.
	The third major problem with the Bill is that, as my hon. Friend the Member for Christchurch said in moving its Second Reading, it is intended to be only prospective; if enacted, it would apply only to offences committed in the future. His principal aim is to ensure that the burden on magistrates courts does not become too great, but the difficulty is that if the Bill was enacted those already convicted of offences in magistrates courts would form one class of person whose criminal records were not following them around—notwithstanding the mischief that my hon. Friend seeks to address, because the information or data were at one stage in the public domain —whereas the criminal convictions of those who committed offences in future could follow them around.
	For all those reasons, although my hon. Friend and the sponsors of the Bill have a very fair point and have quite properly alluded to an anomaly—the public’s inability to secure access to the records—it seems that the Bill is defective in any number of respects.

Stephen Phillips: My hon. Friend asks an interesting question. The short answer—I will be completely honest with him—is that I do not know, because I have not thought about it. I am seeking to point the Bill’s defects and why it will therefore not secure my support on Second Reading. The solution can no doubt be taken up by Ministers in due course. I none the less consider the points I have made to be valid, so I urge the House not to give the Bill a Second Reading.

Lynne Featherstone: I am grateful to my hon. Friend the Member for Christchurch (Mr Chope) for giving me this opportunity to talk about his private Member’s Bill. I will, if I may, set out how the current system works and our concerns about the Bill as drafted.
	The Bill seeks to set up a system under which details of all court convictions will be held by the Criminal Records Bureau, and access to those records will then be available to the general public. This involves several issues, which I will tackle one at a time. First, the Bill would require court conviction details to by held by the CRB. The CRB was established in 2002 and acts as a one-stop shop for organisations checking police records and, in relevant cases, information held by the Independent Safeguarding Authority. It is important to understand the purpose of the criminal records checking system and why there are so many careful considerations about what information the CRB may hold and issue compared with the proposed system, which would be open and accessible in every detail to everyone in this country.
	At the moment, two levels of CRB check are available: standard and enhanced disclosures. Both contain conviction information taken from the police national computer, with enhanced disclosure also involving a check of local police records for relevant and proportionate information —local police intelligence is sometimes termed “soft” information. A standard certificate can be obtained if two criteria are fulfilled: first, that the position under consideration falls within the exceptions order to the Rehabilitation of Offenders Act 1974; and, secondly, that it has been prescribed under Police Act 1997 regulations as a “prescribed purpose”. That is why I intervened on my hon. Friend to question whether there was an inconsistency between the Rehabilitation of Offenders Act and the laudable desires expressed in his Bill, which perhaps cannot be translated into reality by these means.
	An enhanced certificate with barred list information can be obtained if three criteria are fulfilled: that the application falls within the exceptions order; that it is for a prescribed purpose; and that it relates to a position for which suitability information, including barred list information, can be obtained, as also set out in Police Act regulations. At the moment, there are several positions for which barred list information can be given on an enhanced CRB disclosure, including, for children’s barred list information, positions relating to regulated activity in relation to children, other care and supervision for children, fostering and child minding; and, for adults’ barred list information, positions relating to regulated activity in relation to vulnerable adults, registered social
	care agencies and the Commissioner for Older People in Wales. I am sure my hon. Friend is aware that the Protection of Freedoms Bill is in Committee, where changes to these arrangements are being discussed. There is a further level of check—basic—that has yet to be introduced in England and Wales.
	My hon. Friend the Member for Christchurch mentioned the timeliness of CRB checks. In April 2011, consequent on changes to the recording and holding of information by the police, the CRB issued 95.1% of enhanced certificates within 28 days; the figure of March was 95.4%. That is a vast improvement on which it is to be congratulated. Demand for CRB checks has increased year on year and they are now in the millions each year. That improvement is an impressive result.
	CRB checks are mainly used for those working with children or vulnerable adults, but they are undertaken for a wide range of other purposes, such as licensing and in respect of people in positions of trust. In addition to the certificates, individuals can make a subject access request if they wish to find out what information is held about them by individual police forces.
	The CRB operates under the provisions of part V of the Police Act. To achieve what my hon. Friend suggests in the Bill would require amendments to the legislation. The Bill therefore would not work as it stands.
	The Bill would allow anyone to access court records from any court in England or Wales. We rightly have open justice whereby anyone can go into any court to observe what is happening, with a few exceptions involving families and children. The Bill proposes a fundamental change to that access.

Lynne Featherstone: I think that there is differential access; information can be obtained by someone who is present on the day of proceedings or if they read about it in the newspapers. The anomaly, as I see it, is about how much information is available to whom, when and in what fashion. What monitor is available to protect those on whom information is held from people who are not acting in the public interest? That is the test at the moment. Anyone can seek information from a court: the test is whether it is in the public interest. That is a matter for a further debate.
	What is being suggested would add to the functions of the CRB by requiring it to keep a central database of all court outcomes, or results as they are known in the trade. We have never had such a database. Under the current system, people can visit their local court or any other court and read the results of court hearings in the local and national press. Newspapers and other media outlets can obtain free of charge copies of court registers containing the outcomes of criminal cases and the details of upcoming cases. As I have said, we do have an open system of justice.
	If we went down the road proposed in the Bill, where would it lead? First, there is the question of cost. I need hardly explain to my hon. Friend the Member for
	Christchurch that the Government are reducing the deficit. All Departments are working hard to reduce their costs, and introducing a new system such as this would incur substantial costs.
	Further, what real mischief is the Bill designed to remedy? What benefit would be achieved from setting up such a system? How would it benefit our communities? It appears to us that the aim is to make the justice process more transparent, by allowing anyone, anywhere in England and Wales, to find out about convictions in any court, but why would we need to do that when we already have an open justice system? The Criminal Procedure Rules 2010 state, in paragraph (15) of rule 5.4, that every court register
	“shall be open to inspection during reasonable hours by any justice of the peace, or any person authorised in that behalf by a justice of the peace or the Lord Chancellor.”
	As court registers contain personal information that would not be made available in court or elsewhere, the change that my hon. Friend suggests would not simply be a matter of transferring the information to the Criminal Records Bureau. Magistrates courts’ registers are held not by the CRB but by Her Majesty’s Courts and Tribunals Service. Recordable offences—not all offences—are passed electronically from HMCTS to the police national computer, from which the CRB accesses them. Making magistrates courts’ registers available to the CRB would therefore require a process to transfer and store them, with the associated costs.
	There is considerable information kept on magistrates courts’ registers that is not in the public domain. It includes, among many other things, details of individuals’ driving licence numbers, personal details of the recipients of compensation and details of vulnerable victims and witnesses, including those in sexual and domestic violence cases. Court registers also contain much information on people found not guilty or acquitted. Does my hon. Friend think that should be in the public domain, too? If not, as I assume, we would need to find a way of removing that information—again, at considerable cost and contrary to the provisions of the Bill.
	Magistrates courts’ registers also include cases on which there are reporting restrictions in place to stop the naming of individuals—offenders, witnesses, victims or others. Those cases would need to be identified—another costly process, as they are recorded only at first hearing so a linking process would have be identified—and removed from the public register. The Bill does not allow for that, either.
	Magistrates courts also hear some civil and family cases, details of which are recorded in the register. Those cases would need to be filtered out before publication, but the Bill does not allow for that. Proceedings on more serious crimes are concluded in the Crown court, and from reading the Bill it seems that they, too, are to be included in its provisions. Clause 1(1) refers to
	“any other registers produced by a court listing convictions”,
	not just those from magistrates courts. Crown court registers are not currently held electronically. The official record is on paper, and making it available would require extra investment.
	It is difficult to see what access to court records would provide for the public unless there were some search facility. My hon. Friend said that there would be, but that is not specified in the Bill. Such a facility would
	be very costly to develop, as literally millions of records a year would need to be sorted through. Someone could find the result they were looking for only if they knew the exact person, court or hearing involved. Effectively, the public would have access to endless data but get very little useful information—a costly exercise for very little public value.
	We are also concerned that the Bill could work against rehabilitating those convicted by the courts. Let me explain why I say that. The Rehabilitation of Offenders Act 1974 sets out various times after which a conviction becomes spent—when it does not have to be disclosed. My hon. Friend said that it would be done in real time, or within relatively real time, and that an electronic system could be devised incorporating a natural lapse of spent convictions. The aim of current legislation is to allow individuals to move on with their lives, particularly those whose offence was at the lower end of the scale. In order to safeguard the more vulnerable elements of our society, such as children and the old or infirm, certain professions are exempted from the Act, and all convictions, whether spent or not, have to be disclosed.
	That is where the Criminal Records Bureau comes in. That is why we have an expert body doing the criminal records work. It does the necessary checks, and passes the information on to a prospective employer when relevant. I think that most people would consider that to be perfectly reasonable. It strikes a balance between open access to the criminal records system and the rights of those who have transgressed to move on with their lives. My hon. Friend the Member for Bury North (Mr Nuttall) made a point about people who change their names in order to get away from a criminal record. The Bill does not address that point. However, the CRB has in place a thorough system of identity checking. The registered body, which must countersign any application to the CRB, is under a statutory duty to carry out thorough identity checks. The proposed online system would not put in place anything to cover that loophole.
	Hon. Members on both sides of the House will know that we are changing how the system operates through the provisions in the Protection of Freedoms Bill that is before the House, as I mentioned briefly before. Furthermore, the Rehabilitation of Offenders Act was itself the subject of a recent Green Paper, and the results of that consultation process are still under review by the Ministry of Justice. We would not want to take any action that could prejudge or impact in any way upon that review. However, if we put in place the system proposed in the Bill of my hon. Friend the Member for Christchurch, there would be considerable potential for anyone to circumvent the provisions of the 1974 Act and find out about matters that have become spent.
	To avoid that we would need to put in place a series of checks to weed out such spent offences, which would add to the cost overall. However, if court registers were made available online or in some other electronic form by the CRB, there would be no guarantee that removing the spent conviction from the records would achieve much.

Lynne Featherstone: I thank my hon. and learned Friend for that helpful intervention. He raises an important point.
	As we have seen, all sorts of information travel around freely on the internet, irrespective of whether it was intended that the information should get out. I was talking about the suggestion that the information be available online or in some other electronic form. In that case, it could not be guaranteed that if a spent conviction was removed, it would stay removed. The information would have been extracted into other forms of database long before then. It could also allow unscrupulous individuals to go on what are politely called “fishing trips” to see what they could find out about an individual. [Interruption.] I hear “neighbours” from a sedentary position. That is just one possible unintended use of the information available.
	People could also use the information to get round the CRB system, however. They could deny individuals education or employment. They could even obtain information leading to more unpleasant actions such as revenge attacks, including in the context that my right hon. Friend the Member for East Yorkshire (Mr Knight) mentioned about neighbours checking who is in the vicinity. People could obtain information to see where and how revenge might be visited upon those whose records came to light so easily.
	With any system, there must be a balance between the needs of all those who are affected. In our view, what we currently have succeeds, more or less, in achieving that. Those who could be a threat to children or vulnerable people are kept out of certain roles by the protection offered by CRB checks. In the case of offenders, they can put their past behind them, as allowed for by the Rehabilitation of Offenders Act 1974, and I hope become productive and useful members of society again. In the Government's view that process could be significantly undermined if the Bill were to proceed.
	The Bill also contains a reference to the Freedom of Information Act 2000 and says:
	“Information held by a criminal records office…shall not be ‘personal information’ for the purposes of the…Act”.
	The Freedom of Information Act does not define personal information. Instead it provides that certain types of personal data as defined in the Data Protection Act 1998 are exempt from disclosure. Personal data are defined in the 1998 Act as data that relate to a living individual who can be identified from those data, or from those data and other information that is in the possession of, or is likely to come into the possession of, the data controller, which is, in the case we are discussing, the CRB. It includes any expression of opinion about the individual and any indication of the intentions of the data controller or any other person in respect of that individual.
	It is important to note that “data” are also defined in the 1998 Act as information that is being processed by means of equipment operating automatically in response to instructions given for that purpose; is recorded with the intention that it should be processed by means of such equipment; is recorded as part of a relevant filing system or with the intention that it should form part of a relevant filing system; does not fall within the categories above but forms part of an accessible record as defined elsewhere in the Act, and refers to, among other things, health and education records; or is recorded information held in any form by a public authority and does not fall
	within any of the categories I have listed. We can be fairly confident that, in whatever form it is provided, the information we are discussing today would be considered "personal data" for the purposes of the 1998 Act, given the definitions I have just set out.
	In addition, section 2 of the 1998 Act makes it clear that sensitive personal data include information about an individual's racial or ethnic origin, his political opinions, his religious beliefs, his sexual life and information of any proceedings for any offence committed or alleged to have been committed, the disposal of such proceedings or the sentence of any court in such proceedings. Sensitive personal data are given special protection under the 1998 Act. In order for the processing of that data to be lawful, it must comply with the eight data protection principles that are set out in schedule 1. Those principles are as follows: that the data are processed lawfully and fairly, meeting conditions in both schedules and, in the case of sensitive personal data, the conditions in schedule 3 as well; that data are obtained for specified and lawful purposes and will not be processed in any manner incompatible with those purposes; that data are adequate, relevant and not excessive; that data shall be accurate and up to date; that data shall not be kept for longer than is necessary; that data shall be processed in accordance with the rights of the data subject; that technical and organisational measures shall be taken to prevent unauthorised or unlawful processing; and that data being transferred outside the EEA must be sent only to countries that ensure an adequate level of protection for the rights and freedoms of data subjects in relation to processing data.
	For sensitive personal data to be processed lawfully, one condition in both schedules 2 and 3 must be met. The conditions in schedule 2 are as follows: that the data subject consents to the processing; that the processing is necessary for the performance of a contract; that the processing is necessary for compliance with a legal obligation; that the processing is necessary to protect the vital interests of the data subject; that the processing is necessary for the administration of justice or for the exercise of a function of a public nature exercised in the public interest; and that the processing is necessary for legitimate interested purposes by the data controller or third parties, except where this is unwarranted due to the prejudice to the rights and freedoms of the data subject.
	The conditions in schedule 3 are as follows: that the data subject explicitly consents to the processing; that the processing is necessary because of an employment obligation; that the processing is necessary to protect the vital interests of the data subject in respect of other people where consent cannot be obtained; that the processing is carried out in relation to trade union, political, philosophical or religious purposes with appropriate safeguards, and as long as this does not result in the disclosure of data to a third party without the consent of the data subject; that the information has been made public by the data subject; that the processing is necessary for the purposes of legal proceedings; that the processing is necessary in the interests of justice; that the processing is necessary for medical purposes; that the processing is necessary for identifying equal opportunities, and other specified reasons, including the police exercising their common law powers.
	The objective of the part of the Bill relating to the Freedom of Information Act 2000 would appear to be to prevent details of convictions from being released.
	Section 40 of the Freedom of Information Act provides an exemption from disclosure for some personal data. Where the applicant is seeking information on himself, the information is completely exempt under section 40(1) and the applicant should instead make a request under section 7 of the Data Protection Act. That is known as a subject access request.
	Where the applicant seeks information that includes the personal data of a third party, it may be released only to the requesting member of the public if to do so would not contravene any of the data protection principles set out in the Data Protection Act. Those principles ensure that an individual’s personal data are, among other things, only processed—in this context released—when it is fair and lawful to do so. It cannot be right that the protection of an individual’s personal data against unfair processing should automatically be overridden in the way envisioned in the Bill. Not only is it not right but there would be real concerns about whether this part of the Bill would be compatible with article 8 of the European convention on human rights. I will say a little more about that shortly.
	The issues are about not only freedom of information, but the Data Protection Act. Court registers contain considerable personal information—names, addresses, dates of birth, driving licences—on individuals, and not just offenders but victims and the not guilty. Such records are all subject to the Data Protection Act, and we would need to consider how publishing them, especially in the sort of volume that we are talking about, would impact on people’s personal rights.
	Turning to the requirement in clause 1(3) that the criminal records office must ensure that
	“the registers it holds are no more than one month out of date at any time”,
	courts already have a target to result all cases within six working days. So this would be eminently achievable, although there would be issues about the filtering that would need to take place to remove records not in the public domain, which may slow the process up a little. However, records are not updated after they have been published, so if someone successfully appeals against a conviction, the original conviction would remain in the magistrates court register. Someone searching the register would have no idea whether the individual had appealed, nor what the outcome was. If Crown court registers were not published, people would never be able to find out about an appeal hearing. Creating links between systems and updating information in real time would be extremely complex, not to mention costly. At the moment, the Criminal Records Bureau does this work by examining all the records and giving out the information on only the most current position.
	I have already alluded to article 8 of the European convention on human rights which states:
	“Everyone has the right to respect for his private and family life, his home and his correspondence.
	There shall be no interference by a public authority with the exercise of this right except such as in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.”
	Clearly, as we have heard, a balancing exercise needs to be carried out and although there may well be a public interest in having an open justice system—which we do have—that still needs to be weighed against the rights of the individual.
	As was said in the Supreme Court case of R (on the application of L) v. Commissioner of Police of the Metropolis, which concerned the disclosure on an enhanced CRB certificate of information that had not resulted in a conviction in relation to an individual seeking to work with children, the correct approach when looking at two competing convention rights, or when looking at whether interference with article 8 is proportionate, is that neither right takes precedence over the other.

Nadhim Zahawi: I beg to move, That the Bill be now read a Second time.
	We often hear from parliamentarians in this and the other place that radical and controversial ideas and legislation should be piloted before being introduced, so I am delighted to tell the House that 50% of my Bill was piloted this year. A quirk of the calendar meant that the nearest working day to St George’s day—23 April—was a bank holiday. Furthermore, thanks to the royal wedding and the Prime Minister’s generosity to the nation, we shall have nine, not eight, bank holidays this year.
	Why should we make St George’s day an extra, permanent bank holiday? St George became the patron saint of England 661 years ago, his chivalry, values and story seen by King Edward III as a better fit to the England he wanted to rule than the previous patron saint, Edward the Confessor. St George lived more than 1,000 years before that date. He was an immigrant, a Roman soldier born in Turkey, or possibly Kurdistan, perhaps with colouring a little closer to mine than most would imagine. We know him most famously as the dragon slayer, a man whose bravery freed a town from the tyranny of a vicious dragon. He was a man whose Christianity led him to be persecuted and eventually executed on the day we now celebrate in his name. He was adopted and taken into the hearts of the English people for the values he represented, not for who he was or where he was from.
	Although celebrated before 1350, it was only after St George’s adoption as patron saint that he became more ingrained in England’s national psyche. It is said that his popularity and the celebration of his name day increased substantially after Henry V rallied his troops by invoking St George before victory at the battle of Agincourt: “Cry God for England, Harry and St George” wrote the great bard, William Shakespeare, in commemoration. It is perhaps fitting that the great bard himself was born on St George’s day in 1564 in my constituency of Stratford-on-Avon; he died on the same date 52 years later.
	Today, St George represents part of our often under-celebrated national identity.

Greg Knight: When I first saw that my hon. Friend intended to present the Bill, I rejoiced, and I agree with everything he has said so far, but when I saw the contents of the Bill I became alarmed. Does he not agree that the Bill is actually quite divisive? In clause 1, he tells us that the Welsh but not the English can celebrate St David’s day and that the English, but not the Welsh, can celebrate St George’s day. Is it not a nationalist measure that is likely to increase friction between England and Wales, rather than a Unionist policy, as I want, because I support the Union? Is the Bill not likely to be very divisive if passed in its present form?

Nadhim Zahawi: I hear what my hon. Friend says, but it is important to have a bank holiday, because what a bank holiday would to the nation’s psyche is to deliver a permanent reminder of St George’s day, rather than people casually saying, “Well, if it falls on the weekend, it’s fine.” Otherwise we cannot do the thing that we most want to do, which is to recognise it permanently and specifically.

Christopher Pincher: I commend my hon. Friend’s patriotic zeal, but if he wants a truly national public holiday, why do we not choose 21 October, Trafalgar day, as my hon. Friend the Member for Bury North (Mr Nuttall) suggested, given that it celebrates an event in which 4,000 Irishmen, 6,000 Scotsmen and 600 Welshmen, even the odd American and French volunteers, fought on the British side, and a true-born Briton gave his life? Why do we not celebrate that day rather than the day of a mythical Greek who went around slaying mythical beasts?

Therese Coffey: That is a fair point, and there is no more popular day than a day celebrating one’s country, although, with reference to my hon. Friend the Member for Christchurch (Mr Chope), who is no longer in his place, I am conscious that we have always to support the United Kingdom. We have had the royal wedding day,
	and with the diamond jubilee next year I think that such moments of unity may be more appropriate dates on which to build.

Therese Coffey: My hon. Friend makes a valid point. In Scotland they have not only new year’s day off, but 2 January. Perhaps they have such a good time at Hogmanay that they need two days to recover; I do not know the convention around that. Of course, it was not until fairly recently—perhaps within our lifetime, my hon. Friend may note—that Christmas day was not a day off in Scotland, so I fully accept that different countries within the United Kingdom might have different traditions that they wish to modify.

Therese Coffey: I am not trying in any way to associate that idea with the Bill; I am trying to suggest that the Government should take some time to think about the public holidays that affect each individual nation and the United Kingdom as a whole, and to decide whether they are well spaced out, whether there is a concentration around a particular time of year and whether we could do with moving some—be they 1 May, 30 May, the one in August or similar—to different points of the year. It is a long stretch from 31 August right through to Christmas day, especially when we have so many holidays granted to us earlier in the year.
	My hon. Friend the Member for Stratford-on-Avon commented on economic activity, and I should like to see more understanding of that issue. I will not oppose the Bill, because it merits further debate, but I look forward to the Government’s comments, particularly given that some of my local business people have said, “Another bank holiday means another day that I have to pay someone who may not be generating value for my business.” That might seem a bit miserly, but it is not intended to be. That is the reality, and we need to ensure that we are as productive as we can be. We should fly our flags with pride on St George’s day, 1 March,
	30 November and 17 March, but we must ensure that we do not put ourselves at a disadvantage with our international competitors, and not just those within the European Union.

Ian Austin: I join other Members in congratulating the hon. Member for Stratford-on-Avon (Nadhim Zahawi) on introducing the Bill. I also congratulate you, Mr Deputy Speaker, because before you became an occupant of the Chair you led the way in previous Parliaments in promoting a series of patriotic measures. I strongly support this proposal. I strongly believe that we should celebrate St George’s day and that we should, as the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) said, reclaim these symbols from those on the far right who have traduced them.
	We heard several other proposals in the debate. For example, the hon. Member for Tamworth (Christopher Pincher) suggested a day of national celebration not on St George’s day but on Trafalgar day. I think we should look for a day that enables us to celebrate much more what we are as a people and a nation, and the unique contribution we have made to the rest of the world. People sometimes ask me what it means to be British. I believe that it is not about where you were born, what you look like, where your parents were from, the religion you practise or any other such factors, but the contribution you make, what you believe, and your adherence to the great British values of democracy, equality, freedom, fairness and tolerance, to which I believe our country has a particular and unique attachment.
	People say that every other country can claim those values just as much as Britain can, but I do not believe that to be true. For example, , when other European countries rounded up Jews in the second world war, put them on trains and sent them to concentration camps—we were reminded of that only yesterday with the trial of Demjanjuk—Britain, uniquely, provided a safe haven for Jewish children such as my father, who came here at the age of 10, unable even to speak English. I therefore think we can say that this country has a unique commitment to the values of democracy, equality, freedom, fairness and tolerance, and that we should stand up for that. We should pick a day to celebrate that reminds us, children in Britain and everyone who wants to live in this country that it is those values that make us British and that make our country so special.
	When the Minister responds, I would like to hear what thought he and his colleagues have given to picking a date that can be set aside for an annual moment of reflection and celebration to remind the whole country of the unique contribution that British people have laid down their lives to give to the rest of the world.

Chi Onwurah: I thank the hon. Lady for that intervention. I will consider that in the run-up to next year’s event.
	The royal wedding in April was a huge celebration of national identity. A million people came to London to celebrate with good humour and great pride, and all over the country people gathered in pubs, parks, streets and halls to watch. Even republicans managed to enjoy it in their own way and with good grace. We hope that the Government are already putting in place measures to ensure that the Queen’s diamond jubilee next year is as “amazing” as the wedding, as Her Majesty is reported to have characterised it.
	The Opposition do not oppose Second Reading and look forward to seeing the Bill in Committee, but a number of important issues have to be considered before we will support it. The hon. Member for Stratford-on-Avon considered the economic impact, and we are aware of the Government estimate that an additional national bank holiday would cost £2.9 billion. That would have clear implications for business, trade unions and other stakeholders.
	There are issues besides costs for the Committee to examine. For example, we must make fair international comparisons. As the hon. Member for Suffolk Coastal (Dr Coffey) said, I am not sure it is fair to claim that we have significantly fewer holidays than others because in France, for example, if May day falls on a Saturday or Sunday there is no day off in lieu. With our strong sense of fairness, we ensure that a bank holiday is always a working day. Taking that into account, I believe that, on average, other European countries have only a slightly larger number of bank holidays. The French Government are reportedly considering reducing the number of public holidays. The hon. Lady pointed out that the US has more, but the trade-off is that far less holiday time is provided for businesses and workers.
	There is a further concern that is the subject of daily and hourly discussion throughout these isles—the weather. As my hon. Friend the Member for Dudley North (Ian
	Austin) said, an April bank holiday has little chance of coinciding with an English heat wave—nor, I am told, is March the best time to showcase Welsh sunshine. As a nation, we are working harder over longer hours, in more stressful conditions, so should we not have a decent chance of decent weather on a day off?
	Furthermore, some might question the principle of telling hard-working men and women what they should do with their time off. It does not sound very English, does it? Unlike the French, the English have no need of an académie to celebrate the language of Shakespeare. Some might question whether a bank holiday is necessary to strengthen the homeland of Churchill, Brunel, Boadicea and St Cuthbert, to name but a few, or for that matter the home of Owain Glyndwr and the Eisteddfod.
	As has been mentioned, however, a poll conducted for St David’s day 2006 found that 87% of people in Wales wanted it to be a bank holiday, with 65% being prepared to sacrifice a different bank holiday. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) referred to the strong support in Wales for a St David’s day bank holiday. We therefore believe that there is strong evidence of popular interest in making St David’s day and St George’s day bank holidays, and that it is worth while examining in more detail how the matter can be taken forward. The Department for Culture, Media and Sport is in pre-consultation on the May day bank holiday, and as a result we hope to learn more about British attitudes to bank holidays. We hope, though, that we will not lose our May day bank holiday.
	We believe that we should celebrate our national identity, and unlike the Government we believe in promoting strong local, regional—we have not yet banned the R-word—and national identities. We look forward to discussions in Committee to see whether the Bill is the best way of doing so.

John Hayes: Would that you, Mr Deputy Speaker, had been in Long Sutton in my constituency when St George’s day was celebrated. You would have been able to enjoy, as I did, adorned by the rose of England, the people and personalities of that splendid town. Many people, like me, enjoyed vanilla ice cream made and served by Laddies of Holbeach at an event organised by Jack Tyrrell, whose triumphant election to Long Sutton parish council I know the whole House will wish to celebrate. I can think of no one better than you, Mr Deputy Speaker—I am not in the habit of flattering the Chair, as you know—to have added their celebrity to that occasion. Perhaps I can take this opportunity to invite you to join me in my constituency when the event is next held.
	Last Sunday, I marched, as I do every year, at the head of scouts and guides, cubs and brownies, and beavers and rainbows from Spalding marketplace to the church of St Mary and St Nicholas to celebrate St George’s day —rather late, the House will note, because of the royal wedding and all the events we enjoyed as a nation that obliged those organisations to delay their usual celebrations. It is an annual joy to be part of that and to see young people experiencing the benefits described by so many Members today of national identity, including the purposeful pride instilled in our hearts by our understanding of what we are and where we have come from.
	It has been the habit of those in the bourgeois liberal class—by that, of course, I do not mean the Liberal Democrats; I am using “liberal” with a small L—who are doubt-filled and guilt-ridden to understate the significance of that sense of identity. Let that passing phase in our history be now put to one side. Let us all, as a nation, understand that this sense of belonging feeds our sense of worth and value.
	To that end, I warmly welcome my hon. Friend’s Bill and the chance it has given us to debate these matters. At its heart, it is a celebration not only of St George’s day and St David’s day, but of St George and St David themselves. In anticipation of this day, preparing with the diligence that I hope I usually display, I took the trouble to wander into Central Lobby and look at the fine mosaics of St George and St David—and also of St Andrew and St Patrick—that adorn that place. You will be familiar with them, Mr Deputy Speaker. I have purchased two small postcards for you, which I will give you at the end of today’s proceedings. The mosaics, which were added to Central Lobby a considerable time after the Houses’ rebuilding after 1834, are a wonderful display of the very symbols of identity to which the Bill draws the House’s attention.
	St George, you will remember, Mr Deputy Speaker, stands between virtue and purity—other elements in the national identity, described by many Members, and exemplified in the speech of my hon. Friend the Member for Stratford-on-Avon, that make England what it is. Virtue is holding a lion’s skin, illustrating the triumph over brute force, whereas purity holds a bunch of white lilies. I do not want to disappoint my hon. Friend, but St George is clearly a rather pale-skinned youth in the illustration, by the way, but of course that might be poetic licence. The figure of St George says so much about what we are as Englishmen.
	It is appropriate to take this opportunity to celebrate St George and St David. Lest I be accused of any prejudice, I will say a word about St David too, for there is a fine mosaic of him, too. He stands between two angels. I cannot help but notice my hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) at the end of the Treasury Bench, and I want to point out for his benefit alone that St David was originally the saint of Pembrokeshire, and only later became the saint of the whole of Wales. The two angelic figures standing either side of St David in that mosaic, which we pass every day, represent the harp of harmony and the lamp of light. May harmony and light be brought to all our proceedings today and every day.
	I would like to put a couple of other things on the record before I move to the specifics of the Bill—mindful, of course, of your indulgence, Mr Deputy Speaker. No party in this House has a monopoly on patriotism. It would ill serve us to pretend so. Patriotism, the belief in something greater than that which divides us, is an essential component in building a society that works. The things that drive and unite us must be greater than the differences that we enjoy. Indeed, the fact that we can tolerantly enjoy differences is emblematic of what is best about being British.
	In those terms, the Bill is topical. I am sure that everyone enjoyed the recent celebrations of national identity, best shown by the royal wedding, to which the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) referred. It was a truly happy day for those directly involved, and it is marvellous how that happiness
	reverberated across the whole nation. Indeed, my young son Edward played the part of the groom in a royal wedding celebration at John Harrox primary school in my village. He was proud to do so, borrowing my top hat for the occasion.
	We would all love another holiday—I would love many more holidays—but there are costs to be paid. I hope that you, Mr Deputy Speaker, and my hon. Friend the Member for Stratford-on-Avon will not think I am a killjoy for pointing that out. I do so with some reluctance, because I think we are often excessively utilitarian in public policy. I do go with Wilde:
	“A cynic is the man who knows the price of everything and the value of nothing.”
	We weigh and measure public policy solely by utility at great cost. None the less, we must be mindful of cost, in particular because of the times in which we live. It would be less than responsible not to take into account the points made by the hon. Member for Newcastle upon Tyne Central about the possible cost of an additional public holiday, to which I will return in a few moments.
	I will now read from the script that was prepared for me, although I will do so fleetingly and will not let that constrain my rhetoric unduly. The Government regularly receive requests for additional bank holidays to celebrate a variety of occasions. The current pattern of permanent bank holidays is well established, and in recent years leave entitlements for many workers have increased. It might therefore seem, in the eyes of some, unnecessary to announce a further bank holiday, but there will be a holiday next year to celebrate the Queen’s diamond jubilee, as there was to celebrate her golden jubilee. We should celebrate that with exuberance: no understatement and lots of celebration in Westminster and across the country, for my disdain of the bourgeois liberal class extends to its claim that to be exuberant is to be vulgar.

Ian Austin: No one has ever suggested that I am a member of any sort of bourgeois, liberal group. Thirty years ago next year, British forces liberated the Falkland Islands. They did not just free the Falklands, but fought for democracy and freedom more broadly. Would it not be right for the nation to celebrate that anniversary next year, and every year, on 14 June, as an example of Britain’s commitment to democracy, equality, freedom, fairness and tolerance?

John Hayes: My hon. Friend is certainly right. Although we cost such proposals in a clear and empirical way—and notwithstanding my comments about utility—it is right that we should consider the matter in the round. We should assess the effects, both good and bad, on business, because clearly many businesses will benefit from an additional holiday. The tourist business, many of our resorts and parts of our leisure industry would benefit. However, there would be other costs to business, and it is right to listen to what business organisations say. Indeed, I will describe what they have said as we progress through this short but important debate.
	The history of bank holidays will help us to draw some conclusions. Bank holidays are a relatively new phenomenon, of course. Before 1834, the Bank observed about 33 saints’ days and religious festivals as holidays, but in 1834 the number was reduced to just four: 1 May, 1 November or All Saints day, Good Friday and Christmas day. Frankly, in my view, that was rather a meagre ration. In 1871, the first legislation relating to bank holidays was passed when the banker and politician, Sir John Lubbock, introduced the Bank Holidays Act 1871, which specified the days as holidays.
	I understand that Sir John Lubbock was an enthusiastic supporter of national and local cricket, and was firmly of the belief that bank employees should have the opportunity to participate in and attend matches when they were scheduled. Dates of bank holidays are therefore dates when cricket games were traditionally played between villages in the area where Sir John was raised. It is that rather partisan approach to bank holidays, built around Sir John’s personal tastes, which forms the basis, or at least the origins, of the matters we are speaking of today. Nevertheless, people were so glad to be given time off, whether it was to watch cricket or not, they called the first bank holidays St Lubbock’s days for a while. That did not perpetuate, but I hope that politicians of note might consider that, at least in popular if not official terms, special days could be named after them; one never knows, but if my hon. Friend’s Bill were to be successful, his name might, at least colloquially, be attached to the day’s holiday that people enjoyed. However, that rather self-interested motive of course has nothing to do with his bringing the Bill to our attention.
	As is often the case, Scotland was treated separately because of its separate traditions, and so, for example, new year’s day was a holiday there whereas Boxing day was not. The 1871 Act did not specify Good Friday and Christmas day as bank holidays in England, Wales and Ireland because they were already recognised as common law holidays, and common observance had meant that they had become customary holidays since before records began.
	Exactly a century after the 1871 Act, the Banking and Financial Dealings Act 1971, which currently regulates bank holidays in the UK, was passed. The majority of the current bank holidays were specified in the 1971 Act, but holidays for new year’s day in England, Wales and Northern Ireland and for May day were introduced
	later. From 1965, the date of the August bank holiday was changed to the end of the month. Curiously, there were a few years, for example, 1968, when the holiday fell in September, but this no longer occurs, presumably reflecting a change in the way of defining the relevant date. The Whitsun bank holiday, Whit Monday, was replaced by the late spring bank holiday, which was fixed as the last Monday in May in 1971.
	Under the 1971 Act, certain holidays are written into legislation. Those which are not are proclaimed each year by the legal device of a royal proclamation. A royal proclamation is also used to move bank holidays that would otherwise fall on a weekend, so adding an additional one-off holiday, as was the case this year. In that way, holidays are not lost in years when they coincide with weekends. These deferred bank holidays are termed bank holidays in lieu of the typical anniversary date and in the legislation are known as “substitute days”. Although we have fewer public or bank holidays than many other European Union member states, they do not always have substitute days and so, in some sense, the comparison is misleading. That point has been made by a variety of speakers today, including the hon. Member for Newcastle upon Tyne Central (Chi Onwurah).
	To give those north of border a chance to have a longer celebration at new year, 2 January was made an additional bank holiday in Scotland by the 1971 Act—the rest of the country was given the chance to celebrate, less enthusiastically perhaps, by having new year’s day off instead. May day is the most recent of the eight bank holidays and is thought by some to be a controversial choice. It was introduced by the then Employment Secretary, Michael Foot, in 1978, just before he went on to lead the Labour party. At the time many opposed the move, saying that the May day holiday was essentially a communist idea because most countries behind the iron curtain enjoyed it, but it is now in the calendar and a fixture in bastions of communism such as the United States. I think we can assume that those charges did not bear as much weight as their advocates suggested.
	The first bank holiday Act was a welcome innovation—

Henry Smith: I beg to move, That the Bill be now read a Second time.
	I am acutely conscious that we have very little time left before the House adjourns, so I shall try to give the abridged version of a Second Reading speech. I am also conscious, while I am talking about time, that it was only just over a year ago that I was elected to this place and I would not have imagined that I would present a private Member’s Bill on the provision of consumer protection and private car parks. Whenever I contribute in the Chamber, I try to bear reference to my experience as a constituency Member of Parliament and, in my time as a Member of Parliament, I have unfortunately come across a rogue car park operator in my constituency that, for the most minor infractions or for no offence at all, regularly issues motorists with apparent fines or at least demands for payment for very dubious reasons.
	The operator often claims payment from motorists, saying that they did not purchase a ticket, but when a motorist produces evidence that they did indeed buy a pay-and-display ticket the operator says that it was not properly displayed and demands payment. Many people are, in essence, intimidated into parting with their money; demands are often made for £70 rising to £140 if the amount is not paid within two weeks. Many elderly and vulnerable people have been tricked into making a payment that is not a criminal fine but merely a demand from a private car park operator. Many fear for their credit rating, because they receive threatening letters, often with the claim that the company will send in the bailiffs.
	When I raised the issue with the planning and licensing sections of my local authority, I was told that planning legislation does not allow local authorities properly to control the actions of such rogue private car park operators. Their operations are not covered by the licensing regime either.

Chuka Umunna: I thank you, Mr Deputy Speaker, and the House for giving me the opportunity to debate this very important issue today, but before I do so, I should like to say to my constituents that I have been a Member for a year this week, and I have loved every week. It has been a great pleasure to serve the people of my constituency, and I will continue to work my socks off for them so long as I have the privilege of sitting in the House.
	This debate comes at a crucial moment. The world is seeking to address the failings of the financial system in the wake of the 2008 crash. Much of that work is being driven by the G20 and the Basel Committee on Banking Supervision. Of course, credit ratings are hardwired into the new rules that are being implemented now. The sovereign debt crisis that is occurring in the eurozone reminds us of the sheer power of credit rating agencies. Of course, a number of recent studies have posed serious questions about the operation of the credit rating agency market in the wake of the 2008 crash, and I wish to explore some of those issues in the short time available this afternoon.
	I should add that the European Commission will shortly publish its proposals to improve the regulation of the agencies. I hope that this debate will perhaps not only inform the national debate on the issue but give us more clarity on the Government’s position. Just three firms—Moody’s, Standard & Poor’s, and Fitch—control some 95% of the credit rating market. They rate a range of debt instruments, and their ratings are embedded in investment plans, price triggers and the new capital requirements that are being implemented.
	A downgrade by one of the big three agencies can make or break an entire economy, as recent events in the eurozone have shown. Just last month, Greece’s Prime Minister accused them of
	“seeking to shape our destiny and determine the future of our children.”
	Some people might say that that is unsurprising, given Greece’s position at the moment and the difficulties that it has faced, but Greece is not the only country that has complained. The US Assistant Treasury Secretary, Mary Miller, also weighed in last month following the downgrade by Standard & Poor’s of its outlook for US sovereign debt.
	The credit rating agencies thus exercise huge power, despite the deep failings exposed during and after the financial crash. Investigations into the financial and economic crisis that have been conducted since then have shown that the agencies played a large part in causing and then exacerbating the financial crisis. The US Senate sub-committee on investigations last month reported that
	“perhaps more than any other single event, the sudden mass downgrades of residential mortgage-backed securities and collateralized debt obligations were the trigger for the financial crisis.”
	The report of the US Government’s financial crisis inquiry committee stated that
	“the failures of credit rating agencies were essential cogs in the wheel of financial destruction. The three credit rating agencies were key enablers of the financial meltdown.”
	Here, the Financial Services Authority in Lord Turner’s review of 2009 said much the same when it concluded that
	“the credit ratings-based system played an important part in the origins of the crisis”.
	These are not isolated claims. Studies published by the Financial Stability Board, the Bank of England and the European Commission’s de Larosière group reach a similar conclusion. The key points are these. In the years preceding the financial crisis, the credit rating agencies fuelled a dangerous liquidity boom by underestimating the credit default risks of sub-prime mortgages and complex structured products. When the bubble burst, sudden downgrades to the ratings embedded in the investment plans, mandates and capital reserve requirements automatically triggered a liquidity crisis which, in effect, made a bad situation much worse.
	Multiple major studies have concluded that the big credit rating agencies were key contributors to a financial crash that cost this country well over £1 trillion. It is therefore incumbent on us to ensure that the flaws in the credit ratings business are dealt with as a matter of urgency. One such flaw, which must be addressed, is the fundamental conflict of interest that arises through the so-called issuer-pays model. Under this model the issuer of a security can shop around for a rating, creating a race to the bottom in the integrity of ratings. Competition for this lucrative business puts pressure on rating agency staff to downplay risk and to collude with issuers, particularly when rating elaborate packages of structured debt. The result, seen in the sudden mass downgrades at the start of the financial crisis, is a dangerous ratings inflation.
	This process was a common observation of all the investigations that I mentioned. The de Larosière report, for example, said
	“the conflicts of interest in CRAs made matters worse. The issuer-pays model, as it has developed, has had particularly damaging effects in the area of structured finance.”
	The US Senate report concurred, saying:
	“The conflict of interest inherent in an issuer-pay setup is clear: rating agencies are incentivized to offer the highest ratings, as opposed to offering the most accurate ratings, in order to attract business.”
	These findings are supported by evidence from within the rating agencies themselves. In internal correspondence published by US congressional investigations, staff joked that a deal
	“could be structured by cows and we would rate it”,
	and discussed “adjusting”, “spinning” and “massaging” ratings methodologies in order to preserve market share. I have read many of the documents and e-mails myself.
	A 2008 survey of finance professionals by the CFA—chartered financial analyst—Institute found that 11% of respondents had witnessed agencies altering ratings under pressure or influence from outside parties, so any serious regulation of the system needs to target the inherent conflict of interest in the issuer-pays system.
	This brings me to the recent moves by the European Commission. Recent EU legislation has taken some important steps in the right direction. It makes it mandatory for all credit rating agencies operating in the EU to register with the new European Securities and Markets
	Authority, which will monitor their methods and potential conflicts of interest. It also gives that authority powers to investigate agencies and, in the event of infractions, suspend agencies’ licences. For me, the question is: does this do enough? I am not sure that it does, because it does not fundamentally challenge the issuer-pays model that has been shown to incentivise ratings inflation.
	I mentioned earlier that the European Commission is due to publish a series of new proposals, and the options that it floated in its consultation in November, which finished in January, included the creation of a European credit rating agency, support for investor-owned agencies, an independent clearing board to allocate ratings business, a network of small and medium agencies, and an obligation on institutional investors to obtain their own rating before purchasing a product. The Commission has said that it is about to table new legislation in this area. Does that accord with the Treasury’s understanding? I would be grateful if the Minister could tell me when that legislation is expected to be published.
	The UK’s tripartite authorities produced a response to the Commission’s options in January 2011, which largely rejected the suggestions that had been placed on the table, placing great confidence in the pre-existing EU regime. Their response also called for a “more narrowly focused” approach to further reform. Most contentiously, their response said that there is
	“no hard evidence that conflicts of interest in the ‘issuer-pays’ model lead to ratings inflation”.
	It has to be said that that is very difficult to reconcile with the findings of the various investigations into the role of the issuer-pays model in the causes of the financial crisis, which I have just mentioned. I ask those interested in this to read the reports that I have mentioned and decide whether the tripartite response is appropriate.
	It is clear to me that tackling the conflicts of interest is central to reforming the system. I know that Treasury Ministers, perhaps the Chief Secretary to the Treasury excepted, have not historically been the biggest fans of the EU, but I urge the Government to be bold and adopt an open-minded approach to the Commission’s proposals when they come out.
	As the Financial Times has pointed out, a publicly owned but independent credit rating agency
	“would go some way to mitigate”
	the risks of the issuer-pays system. A variation on that idea, a European credit rating foundation funded by the financial industry recently received the backing of the European Parliament’s Economic and Monetary Affairs Committee, which has called on the Commission to conduct a
	“detailed impact and viability assessment”.
	In the US, the Senate has already approved an amendment establishing a clearing body for credit ratings.
	Finally, I draw the attention of the House to the Bank of England’s financial stability paper of March 2011, which explored the feasibility of moving from an issuer-pays to an investor-pays model. That concluded that, despite the obstacles, such a radical change
	“may not be insurmountable”.
	Ministers, particularly from the Treasury, with whom I tend to have much discussion on the Treasury Committee, of which I am a member, enjoy reminding me that much
	of what I have just mentioned happened on the watch of the last Labour Government, and I have admitted and said many times in the House that we did not get the regulation of banks completely right on our watch, although I do not remember there being a huge clamour for a massive clampdown from the Opposition at the time. What people out in the real world want to know from the Minister this afternoon is not how awful he thinks my lot were, but what the Government will do.
	The 1997 Asian crash and the 2001 Enron collapse both exposed flaws in the way the agencies operate, yet their power remained unchecked and their failings went unaddressed then. We are all well aware of what followed in the 2008, and we cannot afford a repeat of that mistake in 2011 and beyond. The status quo is not an option. Ultimately, the pensions, savings, jobs, homes and livelihoods of our constituents depend on a credit rating system built on integrity and accuracy. We owe it to them to ensure that that is precisely what the system is.

David Gauke: May I first congratulate the hon. Member for Streatham (Mr Umunna) on securing the debate in this, the anniversary week of his election to Parliament? I am pleased to have the opportunity to explain and discuss the Government’s policy on credit rating agencies—an issue that has generated a fair amount of interest, including outside the United Kingdom. It might be helpful if I start by outlining the Government’s current position and set out the steps that have been taken here and in Europe to address the shortcomings in this area, but before doing so I would like to make two observations.
	First, the financial crisis has clearly highlighted the fact that reform of CRAs is essential, as the hon. Gentleman has argued, both in the way they are supervised and regulated and in the way they conduct themselves and explain their decisions to the market. That has already led to significant regulatory changes. CRAs must now register to be recognised in the EU and comply with rigorous procedures and controls in using their ratings. The European Commission has identified further measures to address over-reliance on CRA ratings and to improve competition and CRA accountability.
	However, although reform is necessary, CRAs play an essential role in international markets. They provide the market with a neutral assessment of credit worthiness, a service that is valued by investors and crucial to the functioning of the international financial system. Reform should therefore aim to improve ratings quality and the way ratings information is used by investors, but it should not unduly undermine what is an essential service to international capital markets.
	Recent market events have highlighted concerns about the role of CRAs, which is why we fully support international efforts to improve their regulation, to introduce greater transparency and competition and to reduce reliance on credit ratings, while acknowledging the complexity of the issues and the important role played by CRAs. The UK authorities have been, and will continue to be, active in both the EU and the G20 processes, including discussions on possible further measures that the Commission is considering in this area.
	With regard to what has been achieved to date, the hon. Gentleman is obviously aware that the first European credit rating agency regulation—CRA1—came into force in December 2009. It ensures that CRAs demonstrate that they manage potential conflicts of interest adequately and improve processes relating to the issuing and monitoring of ratings. It requires more robust internal control functions, greater transparency of methodologies and processes, due diligence procedures and the disclosure of performance. It provides a minimum standard of CRAs' systems and controls, ensuring that ratings in the EU are of a high quality.
	As the hon. Gentleman will also be aware, that regulation has recently been amended to place rating agencies under European supervision. To be recognised for regulatory purposes, CRAs must go through a registration process, ensuring that they meet the standards of the new CRA regulation. From June, the newly established European Securities and Markets Authority will have the power to ensure that CRAs comply with the regulation. Other jurisdictions, including the US, are adopting similar regimes to ensure a consistent international standard. Those requirements of the European legislation apply to all asset classes and are aimed, in particular, at addressing the problems associated with structured products, an area where, as demonstrated during the crisis, CRAs have evidently failed to provide reliable ratings in some countries. CRAs are also banned from providing advisory services and are required to demonstrate that they have sufficiently analysed the underlying data in producing ratings for structured products. Overall, we consider that those measures will help to0 improve the quality and reliability of ratings.

Chuka Umunna: I have a further point and a question about what the Minister has just said. I should have mentioned that I have met the senior management of the rating agencies, both here and in New York, and it is fair to say that they do not necessarily welcome such massive reliance being placed on them; they did not necessarily ask for responsibility on such scale. What have the Government been doing at G20 level about these issues?
	On a subsidiary point, the Financial Stability Board will obviously take an interest in this issue. Will the Minister tell me, or write to me to let me know, the members of the Financial Stability Board’s council? I understand that Lord Turner is a member, but it is a bit of a shadowy organisation and there have been some questions, not necessarily about its integrity, but about who is involved, because obviously it has a role to play in this area, too.

David Gauke: I will certainly write to the hon. Gentleman in response to that query.
	The UK Government have been very much engaged at G20 level and at a European level on the issue. In the context of European engagement, the next stage, which the hon. Gentleman mentioned in his speech, is the further work that remains to be done, and the European Commission released a consultation document in
	November 2010 on additional measures that might be taken on credit ratings. The main proposals related to reducing over-reliance on ratings and the additional measures related to increasing regulation on sovereign ratings; enhancing competition, such as establishing a public CRA, as the hon. Gentleman suggested; potentially increasing CRAs’ exposure to civil liability; and addressing the conflicts embedded in the "issuer pays" business model.
	The Government, together with the Bank of England and the FSA, have published a joint response to that consultation, setting out our view in detail on the Commission’s proposals, and I am very happy to provide the hon. Gentleman with a copy. In summary, we support measures to reduce reliance on CRA ratings—a point that he made in his intervention when he said that many of the problems relate to the level of reliance on such ratings. We also support measures to increase transparency and disclosure, and to stimulate competition by lowering barriers to entry. We believe, however, that measures to impose civil liability or to establish a public CRA to issue ratings, particularly sovereign ratings, would be counter-productive and lead to unintended consequences.
	The hon. Gentleman raised the issue of a public CRA, but the potential conflicts of interests in any such arrangement—particularly in the context of sovereign debt—would undermine credibility. Alternatively, although I am not sure whether the two arguments are mutually exclusive, there is the danger that a public body would crowd out other credit rating agencies and reduce competition, and neither of us would be keen to welcome that. To answer the hon. Gentleman’s question, however, the Commission will publish its legislative proposals in September.
	The recent sovereign debt crises have raised concerns about the role of CRAs in sovereign borrowing. The
	Government believe that, above all, it is crucial to ensure the impartiality of all ratings, including sovereign ratings, and that means improving transparency by CRAs to facilitate investor understanding, rather than regulating sovereign ratings in a way that compromises their credibility.
	Internationally, there has also been a welcome initiative with the Financial Stability Board, considering measures to reduce the over-reliance on CRA ratings. That initiative is investigating what alternatives to CRA ratings can be used in regulatory requirements, in investor mandates and contracts and in central bank operations. Ways to encourage due diligence by market participants themselves are also being explored.
	As I said earlier, the Government fully recognise the concern about CRAs. The coalition Government saw from the financial crisis that greater regulation was required to ensure high-quality ratings and a more judgment-based use of ratings by the market. The current sovereign debt crisis further highlights the need for CRAs to communicate consistently and effectively their analysis to the market, and for investors to understand what ratings represent.
	That is why the coalition Government are supporting a reform package in Europe which focuses on the root cause of the problems associated with CRAs, while being cognisant of and safeguarding the essential role that CRAs play in the international financial system. We believe that, in addition to the substantial progress already made by CRA1 and CRA2, further reducing mechanistic reliance on CRAs, increasing transparency and reducing barriers to entrant CRAs would be effective ways of achieving that goal.
	Question put and agreed to.
	House adjourned.